AGREEMENT AND PLAN OF MERGER

Exhibit 2.1
EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

among

GLOBAL CONSUMER ACQUISITION CORP.,

as Parent,

WL INTERIM BANK,

as Merger Sub,

1ST COMMERCE BANK,

as Bank,

CAPITOL DEVELOPMENT BANCORP LIMITED V,

and

CAPITOL BANCORP LIMITED

Dated as of July 13, 2009

TABLE OF CONTENTS

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AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement” ), is made effective as of July 13, 2009, by and among GLOBAL CONSUMER ACQUISITION CORP., a Delaware corporation with its principal place of business in New York, New York ( “Parent” ), WL INTERIM BANK, a Nevada corporation ( “Merger Sub” ), 1ST COMMERCE BANK, a Nevada-chartered non-member bank ( “Bank” ), CAPITOL DEVELOPMENT BANCORP LIMITED V, a Michigan corporation with its principal place of business in Lansing, Michigan, the direct owner of a majority in interest of Bank ( “Capitol” ), and CAPITOL BANCORP LIMITED, a Michigan corporation with its principal place of business in Lansing, Michigan ( “CBL” ) (for purposes of Section 7.5, Section 7.10, Section 9.8, Section 9.11(d), Section 9.14 and Section 9.15). Parent, Merger Sub, Bank, Capitol and CBL are sometimes individually referred to herein as a “Party” or collectively referred to herein as the “Parties” ).

RECITALS

WHEREAS , Parent, Merger Sub and Bank intend to effect a merger, whereby Merger Sub shall be merged with and into Bank (the “Merger” ), upon the terms and subject to the conditions of this Agreement and in accordance with the Nevada Revised Statutes ( “Nevada Law” );

WHEREAS , the board of directors of Bank has (i) approved this Agreement, the Merger and the other transactions contemplated by this Agreement and declared the Merger’s advisability, (ii) determined that it is in the best interest of the Stockholders to consummate the Merger on the terms and subject to the conditions of this Agreement and the other transactions contemplated hereby, and (iii) recommended that the Stockholders adopt and approve this Agreement, the Merger and the other transactions contemplated by this Agreement (collectively, the “Bank Board Approval” );

WHEREAS , each of Capitol and CBL will benefit from the consummation of the Merger and it is a material inducement to Parent and Merger Sub entering into this Agreement that each of Capitol and CBL be a Party hereto.

NOW THEREFORE , in consideration of the mutual covenants, representations, warranties and agreements herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE 1

CERTAIN DEFINITIONS

1.1  Certain Definitions.   Unless the context otherwise requires, capitalized terms used in this Agreement shall have the meanings set forth herein or in SCHEDULE I attached hereto. References to Articles, Sections, Exhibits and Schedules refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement.

ARTICLE 2

THE MERGER

2.1  The Merger.   At the Effective Time and subject to and upon the terms and conditions of this Agreement and the applicable provisions of Nevada Law, the Merger shall occur, the separate corporate existence of Merger Sub shall cease and Bank shall continue as the surviving corporation. Bank, as the surviving corporation after the Merger, is hereinafter sometime referred to as the “Surviving Corporation” .

2.2  Filing; Effective Time.   Upon the terms and subject to the conditions of this Agreement and in accordance with Nevada Law, the parties hereto shall cause the Merger to be consummated by filing articles of merger, in such appropriate form as determined by the parties, with the Secretary of State of Nevada (the “Articles of Merger” ) (the date and time of such filing (or such later date and time as may be agreed in

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writing by Bank and Parent and specified in the Articles of Merger) being the “Effective Time” ) as soon as practicable on or after the Closing Date.

2.3  Effect of the Merger.   At the Effective Time, the effect of the Merger shall be as provided in this Agreement and Section 92A.250 of Nevada Law and other applicable provisions of Nevada Law. Without limiting the generality of the foregoing, at the Effective Time all the property, rights, privileges, powers and franchises of Bank and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of Bank and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

2.4  Articles of Incorporation; Bylaws.

(a) At the Effective Time, the Articles of Incorporation of Bank, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation until thereafter amended as provided by law and as provided by such Articles of Incorporation of the Surviving Corporation.

(b) At the Effective Time, the Bylaws of Bank, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation until thereafter amended.

2.5  Directors and Officers.   The directors of the Surviving Corporation as of the Effective Time shall be the directors of Merger Sub immediately prior to the Effective Time, until their respective successors are duly elected or appointed and qualified. The officers of the Surviving Corporation as of the Effective Time shall be the officers of Merger Sub immediately prior to the Effective Time, until their respective successors are duly appointed.

2.6  Effect on Capital Stock of Bank.   Upon the terms and subject to the conditions of this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Merger Sub, Bank or the holders of any Shares or any shares of capital stock of Merger Sub, the following will occur:

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2.7  Effect on Capital Stock of Merger Sub.   Each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one validly issued, fully paid and nonassessable share of common stock, par value $5.00 per share, of the Surviving Corporation. From and after the Effective Time, each certificate evidencing ownership of shares of the common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall evidence ownership of such shares of common stock of the Surviving Corporation.

2.8  Surrender of Certificates.

(a)  Exchange Agent.   Prior to the Effective Time, Parent shall designate Wells Fargo Bank, N.A. or, if not Wells Fargo Bank, N.A., then a United States bank, trust company or other party reasonably acceptable to Bank, to act as the exchange agent (the “Exchange Agent” ) in the Merger.

(b)  Exchange Procedures .

(c)  Termination of Exchange Fund.   Any portion of the Merger Consideration deposited with the Exchange Agent pursuant to Section 3.2 that remains undistributed to the Stockholders for six months after the Effective Time shall be delivered to Parent, upon demand, and any Stockholder who has not previously complied with this Section 2.8 shall thereafter look only to Parent for payment of its claim for the applicable Per Share Closing Payment without interest.

(d)  No Liability.   Notwithstanding anything to the contrary in this Section 2.8, none of Parent, Merger Sub, Bank and the Exchange Agent shall be liable to any person in respect of any portion of the Closing Payment deposited with the Exchange Agent pursuant to Section 3.2(b) that is subsequently delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

(e)  Withholding Rights.   Parent shall be entitled to deduct and withhold from the portion of the Merger Consideration otherwise payable to any Stockholder, as the case may be, pursuant to this Agreement such amounts as it determines in good faith to be required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of applicable law. Any amounts so deducted and withheld shall be treated as having been paid to the applicable Stockholder for purposes of this Agreement. In connection with any withholding or other tax payment or report made by Parent related to any consideration received or to be received by a Stockholder in connection with the Merger, Parent will provide such Stockholder with such tax reporting documentation as may be reasonably required to evidence the payment.

(f)  Lost, Stolen or Destroyed Certificates.   If any Certificates shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the holder thereof (the “Affidavit” ), the Exchange Agent shall pay in exchange for such lost, stolen or destroyed Certificates, the total Per Share Merger Consideration into

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which the Shares represented by such Certificates were converted pursuant to Section 2.6(a) that such holder otherwise would have been entitled to hereunder; provided , however , that Parent may, in its discretion and as a condition precedent to such payment require the holder of such lost, stolen or destroyed Certificates to deliver a bond in a reasonable amount as indemnity against any claim that may be made against Parent, the Surviving Corporation or the Exchange Agent with respect to the Certificates alleged to have been lost, stolen or destroyed.

2.9  Taking of Necessary Action; Further Action.   If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of Bank and Merger Sub, the officers and directors of Parent, Merger Sub and Bank are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action.

ARTICLE 3

THE CLOSING; MERGER CONSIDERATION; OTHER PAYMENTS

3.1  Time And Place.   Subject to the provisions of Article 12, the closing of Merger (the “Closing” ) shall take place at the offices of Brownstein Hyatt Farber Schreck LLP, 100 City Parkway, Suite 1600, Las Vegas, Nevada 89106-4614, at 10:00 a.m. local time on a date specified by Parent at least three (3) Business Days prior to such date, or at such other place, date or time mutually agreed by Parent and Capitol; provided, that all conditions to Closing have been satisfied or waived pursuant to Article 10 as of such date (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions) (such date, the “Closing Date” ).

3.2  Merger Consideration.   The merger consideration for the Shares is $8,250,000, subject to adjustment at and after the Closing, as set forth in Section 4.1 below, and to the other terms and conditions contained in this Agreement (the “Merger Consideration” ). On the Closing Date, Parent shall deposit the Merger Consideration with the Exchange Agent (the “Closing Payment” ), each payment to be made by wire transfer in immediately available funds.

3.3  Closing Deliveries Of Bank And Capitol.   At the Closing, Bank and Capitol shall deliver, or cause to be delivered, to Parent the following:

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3.4  Closing Deliveries Of Parent And Merger Sub. (a)   At the Closing, Parent and Merger Sub shall deliver, or cause to be delivered, to Capitol the following

(i) copies of all consents, notices and approvals required to be obtained by Parent and Merger Sub pursuant to Sections 10.1(b);

(ii) a copy of the resolutions of the Board of Directors of Parent authorizing the execution and delivery of this Agreement and the completion of the transactions contemplated hereby, certified to be a true, complete and correct, without amendment, by the Secretary of Parent;

(iii) a copy of the resolutions of the Board of Directors of Merger Sub authorizing the execution and delivery of this Agreement and the completion of the transactions contemplated hereby, certified to be a true, complete and correct, without amendment, by the Secretary of Merger Sub;

(iv) each of the certificates to be delivered under Section 10.3(a) and (b), duly executed by the appropriate Person(s) specified in such Sections;

(v) the Services Agreement executed by Parent and Merger Sub; and

(vi) such other documents, instruments, certificates and other agreements as Capitol may reasonably require to effect the transactions contemplated by this Agreement to be consummated as of the Closing.

(b) At the Closing, Parent and Merger Sub shall deliver, or cause to be delivered, to the Exchange Agent the Closing Payment, as required under Section 3.2(b).

ARTICLE 4

MERGER CONSIDERATION ADJUSTMENT

4.1  Merger Consideration Adjustment.

(a) The Merger Consideration shall be subject to reduction or increase in accordance with this Article 4 both (i) at the Closing and (ii) after the Closing, in each case on the terms and subject to the conditions set forth herein. The Tangible Book Value shall be calculated in the same manner as in the balance sheet of Bank attached hereto as Exhibit C (the “ Model Balance Sheet ”).

(b) At least five (5) Business Days prior to the Closing Date, Capitol shall deliver to Parent an estimated balance sheet of Bank (the “ Estimated Balance Sheet ”) and a statement of the Estimated Tangible Book Value

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of Bank (the “ Estimated Tangible Book Value Statement ” and, together with the Estimated Balance Sheet, the “ Estimated Documents ”), each as of the Closing. Such Estimated Documents shall be accompanied by a Certification Statement by the chief financial officer of Capitol. Prior to the Closing, Parent and Capitol shall, in good faith, agree to the Tangible Book Value of the Owned Real Property as of the Closing, for purposes of the Estimated Tangible Book Value. If, within two (2) Business Days following receipt of the Estimated Documents, Parent has not given Capitol notice of its objection to either of the Estimated Documents, the Merger Consideration shall be adjusted as follows: (i) if the Estimated Tangible Book Value as of the Closing is at least $250,000 less than or more than the Target Tangible Book Value, then the Merger Consideration shall be recalculated so that the Merger Consideration shall be the sum of (x) 1.5 multiplied by the Estimated Tangible Book Value up to $6 million, plus (y) if the Estimated Tangible Book Value exceeds $6 million, one (1) multiplied by the difference between Estimated Tangible Book Value and $6 million; or (ii) if the Estimated Tangible Book Value as of the Closing is within $250,000 (higher or lower) of the Target Tangible Book Value, then no adjustment shall be made. If Parent gives such notice of objection, Parent and Capitol will work together in good faith to promptly resolve the issues in dispute. If all disputed issues are resolved, the Estimated Tangible Book Value as agreed upon by Parent and Capitol shall be used to complete the Estimated Tangible Book Value Statement. If Parent and Capitol are unable to resolve all such disputed issues within three (3) Business Days following Parent’s receipt of the Estimated Tangible Book Value, either Party may submit such dispute to the Closing Accountant in accordance with the terms set forth in Section 4.1(d). The Merger Consideration calculated after giving effect to this Section 4.1(b) shall be referred to as the “ Closing Merger Consideration ”.

(c) Promptly after the Closing Date, Parent shall prepare, or cause to be prepared, in accordance with the books and records of Bank, and shall deliver, or cause to be delivered to Capitol, within ninety (90) days following the Closing, a balance sheet (the “ Final Balance Sheet ”) and a statement (the “ Final Tangible Book Value Statement ” and, together with the Final Balance Sheet, the “ Final Documents ”) setting forth the amount of the Tangible Book Value of Bank, each as of the Closing. The Final Documents shall be accompanied by a Certification Statement by Parent.

(d) Capitol shall have the right to review all work papers and procedures used to prepare the Final Documents for Bank, and shall have the right to perform reasonable procedures necessary to verify the accuracy thereof. Unless Capitol, within thirty (30) days following delivery to Capitol of the Final Documents for Bank, notifies Parent in writing that Capitol objects to either of the Final Documents delivered by Parent, specifying the specific items to which it objects and the basis for such objection, such Final Documents shall become final, binding and conclusive upon the parties for purposes of this Agreement. If Capitol so notifies Parent of any objections in accordance with the foregoing, Capitol and Parent shall within fifteen (15) days following such notice attempt to resolve their differences, and any resolution by them agreed upon in writing shall be final, binding and conclusive. If any objections cannot be so resolved, any items remaining in dispute, at the request of either party at any time after the fifteen (15) day period, shall be submitted to Ernst & Young LLP (the “ Closing Accountant ”). If Ernst & Young LLP is unwilling to serve as the Closing Accountant or is not independent, then the Parties shall, in good faith, select a nationally recognized independent public accounting firm, other than Parent’s, Capitol’s or CBL’s accountants, to be the Closing Accountant. The fees of any such accounting firm shall be paid by Capitol, unless either (x) the amount of the net adjustment payable to Parent as a result of the Final Tangible Book Value Statement is more than 110% of the final net adjustment determined to be payable to Parent by the Closing Accountant, or (y) the amount of the net adjustment payable to Capitol as a result of the Final Tangible Book Value Statement is less than 90% of the final net adjustment determined to be payable to Capitol by the Closing Accountant. The Closing Accountant shall act as an arbitrator to determine, based solely on the presentations by Capitol and Parent and not by independent review, only those issues that remain in dispute. Capitol and Parent shall make their presentations promptly after the request by either party to submit the disputed issues to the Closing Accountant. The Closing Accountant’s determination shall be made within thirty (30) days of such presentations, shall be set forth in a written statement delivered to Capitol and Parent, and shall be final, binding and conclusive. The terms “ Final Balance Sheet ” and “ Final Tangible Book Value Statement ” shall be deemed to mean the Final Balance Sheet and the Final Tangible Book Value Statement for Bank delivered by Parent with such changes therein as shall be agreed to by the Parties or finally determined by the Closing Accountant, as provided above, and the

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term “ Final Tangible Book Value ” shall mean the Tangible Book Value as set forth on the Final Tangible Book Value Statement.

(e) If the Final Tangible Book Value as of the Closing is at least $250,000 less than or more than the Target Tangible Book Value, then the Merger Consideration shall be recalculated so that the Merger Consideration shall be the sum of (x) 1.5 multiplied by the Final Tangible Book Value up to $6 million, plus (y) if the Final Tangible Book Value exceeds $6 million, one (1) multiplied by the difference between Estimated Tangible Book Value and $6 million. If the Final Tangible Book Value as of the Closing is within $250,000 (higher or lower) of the Target Tangible Book Value and (i) no adjustment was made to the Merger Consideration pursuant to Section 4.1(b), then no adjustment shall be made, or (ii) the Merger Consideration was adjusted pursuant to Section 4.1(b), then the Merger Consideration shall be recalculated so that it is equal to $8,250,000. The Merger Consideration calculated after given effect to this Section 4.1(e) shall be referred to as the “ Final Merger Consideration ”. If the Final Merger Consideration exceeds the Closing Merger Consideration, then Parent shall pay the Exchange Agent an amount equal to the difference (the “ Total Additional Payment Amount ”). If the Closing Merger Consideration exceeds the Final Merger Consideration, then Capitol shall pay the Parent the difference. Any payments pursuant to this Section 4.1(e) shall be made within five (5) Business Days of the date the Final Tangible Book Value is determined as provided above. Subject to the provisions of Section 2.8(b)(ii), each Stockholder shall be entitled to receive, as an Additional Share Payment, an amount per share of Bank Common Stock held by such Stockholder immediately prior to the Effective Time multiplied by the Per Share Additional Payment Amount.

4.2  Tangible Book Value.   All calculations of Tangible Book Value pursuant to this Article 4 shall be determined as of the Closing, after giving effect to the disposition of all Excluded Loans in accordance with Section 7.9 .

ARTICLE 5

REPRESENTATION AND WARRANTIES OF BANK AND CAPITOL

Subject to such exceptions as are disclosed in the disclosure schedules dated as of the date hereof and attached hereto (the “ Schedules ”) corresponding to the applicable Section and subsection or clause of this Article 5 ( provided , that any information set forth in any one Section of Capitol’s Schedules shall be deemed to apply to each other applicable Section or subsection of Capitol’s Schedules if its relevance to the information called for in such Section or subsection is reasonably apparent on its face notwithstanding the omission of any cross-reference to such other section in the Schedules), each of Bank and Capitol hereby makes the following representations and warranties to Parent and Merger Sub as of the date hereof and as of the Closing Date. The inclusion of an item in the Schedules shall not be deemed an admission by either Bank or Capitol that such item represents a material fact, event, or circumstance or would or is likely to result in a Material Adverse Effect on Bank.

5.1  Capital Structure.

(a) The authorized capital stock of Bank consists of 1,100,000 shares of Bank Common Stock, of which 800,000 Shares are issued and outstanding. Bank has no other authorized classes or series of capital stock. Except as set forth on Schedule 5.1 , Bank has no subsidiaries (including any subsidiaries engaged in non-banking activities) nor does Bank own or have the right or obligation to acquire, directly or indirectly, any outstanding capital stock or other voting securities or ownership interests of any corporation, bank, savings association, partnership, joint venture or other organization (including, without limitation, any ownership interests in the stock of any ATM network corporation), other than investment securities representing not more than one percent (1%) of any entity and the FHLB Stock. The subsidiary of Bank listed on Schedule 5.1 has not operated any business activities and does not have any assets or liabilities (whether known or unknown, accrued or fixed, absolute or contingent, matured or unmatured, determined or determinable, or as a guarantor or otherwise). All outstanding shares of Bank Common Stock (i) have been duly authorized and validly issued, are fully paid and nonassessable and not subject to preemptive rights or similar rights created by statute, Bank’s Articles of Incorporation, the Bylaws or any Contract to which Bank or any of the Stockholders is a

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party and are owned of record and beneficially by the Persons listed on Schedule 5.1 , and (ii) have been offered, sold, issued and delivered by Bank in all material respects in compliance with all applicable Laws. The shares of Bank Common Stock owned by Capitol are owned free and clear of any Liens. Except as set forth on Schedule 5.1 , no Rights are authorized, issued or outstanding with respect to the capital stock of Bank, and there are no agreements, understandings or commitments relating to the rights or obligations of any Stockholder to vote or to dispose of such capital stock or the rights or obligations of Bank to issue any Rights.

(b) The authorized capital stock of Capitol consists of 51,000 shares of common stock, 36,000 shares of which are designated as “Class A Common Stock” and 15,000 shares of which are designated as “Class B Common Stock”. One thousand shares of Class A Common Stock are issued and outstanding, all of which are owned of record and beneficially by CBL and fourteen thousand five hundred eighteen shares of Class B Common Stock are issued and outstanding. No Rights are authorized, issued or outstanding with respect to the capital stock of Capitol, and there are no agreements, understandings or commitments relating to the rights or obligations of any stockholder of Capitol to vote or to dispose of such capital stock or the rights or obligations of Bank to issue any Rights.

5.2  Organization, Standing And Authority Of Bank.   Bank is a Nevada-chartered non-member bank, duly organized and validly existing under the laws of the State of Nevada with the corporate power and authority, and all required permits, licenses, approvals and qualifications, to own or lease or hold as trustee, agent, custodian or in its own right, as the case may be, all of its properties and assets and to carry on its business as now conducted. Bank is duly licensed or qualified to do business and is in good standing in the locations listed on Schedule 5.2 , which constitute each jurisdiction in which its ownership or leasing of property or the conduct of its business requires such licensing or qualification. Bank has heretofore delivered to Parent true and complete copies of the Articles of Incorporation and Bylaws of Bank each as amended and as in effect as of the date hereof, and no amendments thereto are pending. Except as set forth in this Agreement, no action or proceeding has been taken or commenced or is contemplated by Bank, its Board of Directors (or any committee thereof) or any Stockholder with respect to any amendment of the Articles of Incorporation or the Bylaws of Bank, title to the Shares or for the merger, consolidation, sale of assets and business, liquidation or dissolution of Bank.

5.3  Organization, Standing And Authority Of Capitol.   Capitol is a corporation duly organized, validly existing and in good standing under the laws of the State of Michigan with the corporate power and authority, and all required permits, licenses, approvals and qualifications, to own or lease all of its properties and assets and to carry on its business as now conducted. Capitol is duly licensed or qualified to do business and is in good standing in each jurisdiction in which its ownership or leasing of property or the conduct of its business requires such licensing or qualification, except where the failure to be so licensed, qualified or in good standing would not prevent or hinder the consummation of the Merger.

5.4  Legal Authority, Binding Effect.   Except for the Bank Stockholder Approval and the Capitol Stockholder Approval, each of Bank and Capitol has all requisite corporate power and authority (i) to enter into, execute and deliver this Agreement (subject to receipt of all necessary approvals from Governmental Entities) and each agreement, document and instrument to be executed and delivered by Capitol or Bank pursuant to this Agreement (the “ Related Documents ”) and (ii) to perform all of its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Related Documents have been duly and validly authorized by all necessary corporate action in respect thereof on the part of each of Capitol and Bank. This Agreement has been duly and validly executed and delivered by Capitol and Bank and, assuming due authorization, execution and delivery by Parent and Merger Sub, constitutes the legal, valid and binding obligation of Capitol and Bank, enforceable against it in accordance with its terms, subject, as to enforceability, to bankruptcy, insolvency and other Laws of general applicability relating to or affecting creditors’ rights and to general equity principles (the “ Bankruptcy and Equity Exceptions ”).

5.5  No Violation, Conflict, Etc.   Except as disclosed on Schedule 5.5 , none of (i) the execution and delivery of this Agreement or any Related Document, (ii) the consummation of the transactions contemplated hereby or thereby, or (iii) the compliance by Capitol or Bank with any of the provisions hereof or thereof in

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any case does or will (A) conflict with or result in a breach of any provisions of the Articles of Incorporation or Bylaws of Capitol or Bank, (B) violate, conflict with or result in a breach of any term, condition or provision of, or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or give rise to any right of termination, cancellation or acceleration with respect to, or result in the creation or imposition of any Lien upon any property or asset of Capitol or Bank pursuant to, any note, bond, mortgage, indenture, deed of trust, or other contract to which Capitol or Bank is a party or by which Capitol or Bank is bound or to which any of Capitol’s or Bank’s property or assets is subject, or (C) subject to receipt of all required governmental approvals as described in Section 5.6 below, does or will constitute a violation of any order, writ, injunction, decree, judgment, governmental permit, license, statute, rule or regulation applicable to Capitol or Bank.

5.6  Regulatory Approvals.   Except for the filing of applications and notices with, and the consents and approvals of, as applicable, the Bank Regulators set forth on Schedule 5.6 , and except for such filings, registrations, consents or approvals that are disclosed on Schedule 5.6 , no consents, authorizations, approvals of or filings or registrations with any Governmental Entity or with any third party are necessary on the part of Capitol or Bank in connection with the execution and delivery by Capitol or Bank of this Agreement and the Related Documents and the consummation by Capitol or Bank of the transactions contemplated hereby or thereby.

5.7  Regulatory Reports.   Bank has duly filed with the FDIC, the Nevada FID and any other applicable Bank Regulators, as the case may be, in correct form the reports, returns and filing information data required to be filed under applicable Laws, including any and all federal and state banking authorities, and such reports were complete and accurate in all material respects and in compliance in all material respects with the requirements of applicable Laws. In connection with the most recent examinations of Bank by Bank Regulators, except as disclosed on Schedule 5.7 , Bank was not required to correct or change any action, procedure or proceeding that has not been corrected or changed as required as of the date hereof. The Deposits of Bank are insured by the FDIC pursuant to the FDIA. Bank is an insured bank under the provisions of Chapter 16 of Title 12 of the United States Code Annotated, relating to the FDIC, and no act or default on the part of Bank has occurred which might adversely affect the status of Bank as an insured bank under said Chapter. Bank has not knowingly failed to file any suspicious activity report or any report with respect to money laundering generally required to be filed pursuant to the Bank Secrecy Act.

5.8  Loans.

(a)  Schedule 5.8(a) contains a true, correct and complete listing of all Loans as of July 8, 2009, other than Excluded Loans (the “ Retained Loans ”). To the knowledge of Bank and Capitol, all Loans, including, without limitation any related security documentation, are genuine, valid and enforceable, and not subject to set-off, counterclaim or defense by the borrower or obligor (and no claim to set-off or defense has been asserted by the obligor).

(b)  Schedule 5.8(b) lists (by obligor) the aggregate amount for each of the following to which Bank is a party (in each case, the amounts reflected thereon are as of July 6, 2009): (i) Loans under which the obligor is more than ninety (90) days past due with respect to any scheduled payment of principal or interest and (ii) Loans classified as “watch,” “loss,” “doubtful,” “substandard” or “special mention” by any Governmental Entity or by Bank’s internal credit review system.

(c) To the knowledge of Bank and Capitol, Bank has complied, and on the Closing Date will have complied, with all applicable Laws, in making or purchasing Loans. To the knowledge of Bank and Capitol, all Loans serviced by Bank or any Affiliate were serviced in accordance with the requirements of any applicable guaranty of any Governmental Entity, pursuant to commercially accepted standards and, as applicable for mortgage loans, subject to the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association.

(d) Bank has made available to Parent true and correct copies of the requested Loan files related to each individual Loan, note, borrowing arrangement and other requested commitment and information pertaining to all securities held for investment by Bank as of May 31, 2009.

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5.9  Insider Loans.   Set forth on Schedule 5.9 is a list of any and all outstanding notes or other evidences of indebtedness executed and delivered by insiders of Bank to Bank. For purposes of this Section 5.9, “insider” shall mean any Affiliate, officer or director of Capitol or Bank or any stockholder of Capitol or Bank owning 1% or more of Bank’s or Capitol’s stock or any members of the immediate families or related interests of such officers, directors or stockholder, as the terms “immediate families” and “related interests” are defined in §§ 215.2(g) and (n) of Regulation O (12 C.F.R. §§ 215.2(g) and (n)).

5.10  Participation Loans.    Schedule 5.10 attached hereto contains a summary listing, including primary terms, of all outstanding Loans or other evidences of indebtedness in which Bank has participated with other parties either as the originating lender or as a participant.

5.11  Financial Statements; Internal Controls

(a) Capitol and Bank have previously delivered to Parent true and complete copies of the Bank Financial Statements. The Bank Financial Statements (i) are true, accurate and complete in all material respects, (ii) have been prepared in accordance with GAAP consistently applied, except as may be otherwise indicated in the notes thereto and except with respect to the interim statements for the omission of footnotes and (iii) fairly present in all material respects the financial condition of Bank as of the respective dates set forth therein and the results of operations, shareholders’ equity and cash flows of Bank for the respective periods set forth therein, subject in the case of interim statements to year-end adjustments. In addition, the Bank Financial Statements and other financial information of Bank provided by Capitol for inclusion in the Proxy Statement are in compliance with the applicable requirements of Regulation S-X and Regulation S-K.

(b) Bank has in place sufficient systems and processes that are customary for a financial institution and that are designed to (x) provide reasonable assurances regarding the reliability of the Bank Financial Statements and (y) in a timely manner accumulate and communicate to Bank’s principal executive officer the type of information that would be required to be disclosed in the Bank Financial Statements. Neither Bank nor, to Bank’s and Capitol’s knowledge, any Employee, auditor, accountant or representative of Capitol or Bank has received or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether written or oral, regarding the adequacy of such systems and processes or the accuracy or integrity of the Bank Financial Statements. There have been no instances of fraud by Bank, whether or not material, that occurred during any period covered by the Bank Financial Statements.

(c) During the periods covered by the Bank Financial Statements, Bank’s external auditor was independent of Bank and its management. Schedule 5.11(c) lists each written report by Bank’s external auditors to Bank’s or Capitol’s board of directors, or any committee thereof, or Bank’s or Capitol’s management concerning any period covered by the Bank Financial Statements, true and correct copies of which have been delivered to Parent.

5.12  Undisclosed Liabilities.   Except for liabilities: (a) recorded or reserved against on the Bank Balance Sheet; (b) incurred since the Balance Sheet Date in the ordinary course of business consistent with past practice; or (c) as set forth in Schedule 5.12 , Bank does not have any material debts, liabilities, demands or obligations of the nature required to be disclosed in a balance sheet prepared in accordance with GAAP (whether known or unknown, accrued or fixed, absolute or contingent, matured or unmatured, determined or determinable, or as a guarantor or otherwise). Bank does not have any “off-balance sheet arrangements” (as such term is defined in Item 303(a)(4) of Regulation S-K promulgated under the Exchange Act).

5.13  Environmental Matters.   Except as disclosed in Schedule 5.13 :

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5.14  Tax Matters.

(a) All Tax Returns required to be filed by or with respect to Bank (including Tax Returns of consolidated, combined, unitary or similar groups that include Bank (each an “ Affiliated Group ”) have been filed in a timely manner (taking into account all extensions of due dates). All such Tax Returns are accurate, correct and complete in all material respects.

(b) All Taxes owed by or with respect to Bank, whether nor not shown on a Tax Return, have been paid in full on a timely basis.

(c) There is no pending claim in a jurisdiction where Bank does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.

(d) The liability of Bank for unpaid Taxes did not, as of the dates of the Bank Financial Statements described in Section 5.11, exceed the current liability accruals for Taxes (excluding reserves for deferred Taxes) set forth on the Bank Financial Statements.

(e) There are no ongoing audits, examinations or claims procedures with respect to any Tax Returns or Taxes of Bank or any Affiliated Group, and no notice has been received from any Governmental Entity of the expected commencement of such a proceeding.

(f) Bank has a taxable year ending on December 31.

(g) Bank has not agreed to, and is not and will not be required to, make any adjustments under Code section 481(a) as a result of a change in accounting methods.

(h) Bank has not withheld and paid over to the proper Governmental Entities all Taxes required to have been withheld and paid over, and complied with all information reporting and backup withholding requirements, including maintenance of required records with respect thereto, in connection with amounts paid to any employee, independent contractor, creditor or other third party.

(i) Bank is not a party to or subject to any Contract extending, or having the effect of extending, the period of assessment or collection of any Taxes, and no power of attorney with respect to any Taxes has been executed or filed with the IRS or any other taxing authority.

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(j) Bank delivered to Parent correct and complete copies of all Tax Returns filed by or with respect to Bank (or if such Tax Returns are filed by an Affiliated Group, pro forma versions of such Tax Returns reflecting all items relating to Bank) for taxable years beginning after December 31, 2006.

(k) There are no Liens on the assets of Bank relating to or attributable to Taxes (other than Permitted Liens).

(l) No election or consent under Section 341 of the Code has been made with respect to Bank or with respect to any of the assets of Bank.

(m) Bank is not a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code and, at the Closing, Bank and Capitol shall provide Parent with a certificate to that effect (and the related notice to the Internal Revenue Service) that complies with sections 897 and 1445 of the Code and the related Treasury Regulations.

(n) Bank is not a member of an Affiliated Group filing a consolidated federal income Tax Return other than a group of which Capitol is the common parent. Bank has no liability for the Taxes of another Person under Treas. Reg. § 1.1502-6 (or any similar provision of state, local or foreign Law) as a transferee or successor, by contract or otherwise.

(o) Bank has not used a method of accounting that defers the recognition of income for tax purposes beyond the time of receipt of a cash payment or of the arising of an account or other receivable in favor of Bank.

(p) Bank has fully complied with all statutes and regulations with respect to the accounting for and paying over of unclaimed or abandoned funds.

5.15  Legal Proceedings.    Schedule 5.15 hereto lists all currently pending litigation and governmental or administrative proceedings or formal governmental investigations to which Bank is a party, either directly, indirectly or in a fiduciary capacity. There are no actions, suits, claims or proceedings instituted or pending or, to Bank’s or Capitol’s knowledge, threatened against Bank or Capitol or against any asset, interest or right of Bank or Capitol which, if adversely determined, would prevent or hinder the consummation of the Merger or have a Material Adverse Effect on Bank. Neither Bank nor Capitol is a party to any material writ, order, judgment, award, injunction or decree.

5.16  Compliance With Laws.

(a) Except as disclosed on Schedule 5.16(a) , Bank is not, nor has it been, in violation of its Articles of Incorporation or Bylaws, is not and has not been in violation of any applicable Law or any order, rule or regulation of any federal, state, local or other Governmental Entity, or in default under any order, license, regulation or demand of any Governmental Entity and has not received notice of any of the foregoing. Except as disclosed on Schedule 5.16(a) , Bank is not, nor has it been, subject to any regulatory or supervisory cease and desist order, agreement, written directive, memorandum of understanding or written commitment (other than those of general applicability to all banks and holding companies thereof), and has received no written communication requesting that it enter into any of the foregoing.

(b)  Schedule 5.16(b) lists each material consent, license, permit, grant or other authorization issued to Bank or any Employee by a Governmental Entity (i) pursuant to which Bank currently operates or holds any interest in any of its properties and assets or (ii) that is required for the operation of the Bank Business as currently conducted or as currently proposed to be conducted (collectively, the “ Permits ”). The Permits are in full force and effect and Bank is in material compliance with the terms and conditions of all Permits.

(c) Bank’s business is and has been, in all material respects, in compliance with all applicable Laws of all Governmental Entities to which it or its businesses is subject, including, without limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, the Bank Secrecy Act and other applicable fair lending laws and other laws relating to discriminatory business practices.

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5.17  Employee Benefit Plans; Labor.

(a)  Schedule 5.17(a) lists each Benefit Arrangement and Benefit Plan sponsored or maintained by Capitol or Bank pursuant to which any current or formed Employees of Bank, or current or former service providers to Bank, are participants. Schedule 5.17(a) also lists the sponsor (i.e., Capitol or Bank) of each Benefit Arrangement and Benefit Plan. Bank has made available to Parent correct and complete copies of (i) each Benefit Arrangement (or, in the case of any such Benefit Arrangement that is unwritten, descriptions thereof), (ii) the most recent annual reports on Form 5500 required to be filed with the IRS with respect to each Benefit Arrangement (if any such report was required), (iii) the most recent summary plan description for each Benefit Arrangement for which such summary plan description is required and (iv) each trust agreement and insurance or group annuity contract relating to any Benefit Arrangement.

(b) (i) Each Benefit Arrangement that is intended to be tax qualified under Section 401(a) of the Code (each, a “ Qualified Plan ”), is tax qualified and Capitol has received a determination letter from the IRS upon which it may rely regarding each such Qualified Plan’s qualified status under the Code, and with respect to the Stockholder Representative’s ESOP, regarding its qualified status under the Code and status as an “employee stock ownership plan” under Sections 409 and 4975(e)(7) of the Code, for all statutory and regulatory changes with respect to plan qualification requirements for which the IRS will issue such a letter and (ii) no event has occurred since the date of the most recent determination letter or application therefor relating to any such Qualified Plan that would adversely affect the qualification of such Qualified Plan. Capitol has made available to Parent a correct and complete copy of the most recent determination letter received with respect to each Qualified Plan, as well as a correct and complete copy of each pending application for a determination letter, if any.

(c) None of Capitol, Bank or any of their ERISA Affiliates sponsors, maintains, contributes to, or has any liability or contingent liability, including, but not limited to, any “withdrawal liability,” as to any employee pension benefit plan (within the meaning of Section 3(2) of ERISA), including any multiemployer plan (within the meaning of Section 3(37)(A) of ERISA), subject to Sections 412 and 430 of the Code, Section 302 of ERISA or Title IV of ERISA. There is no encumbrance or Lien pursuant to Section 4068 of ERISA or Section 412(n) of the Code (as in effect prior to its repeal) or Section 430(k) of the Code in favor of or enforceable by the Pension Benefit Guaranty Corporation with respect to any of Bank’s assets. None of Capitol, Bank or any of their respective ERISA Affiliates (x) maintains, has established or has ever participated in a multiple employer welfare benefit arrangement as described in Section 3(40)(A) of ERISA, or (y) has any current or future obligation or liability with respect to a Benefit Arrangement pursuant to the provisions of a collective bargaining agreement, in each case on behalf of or with respect to any current or former employee, director, or other service provider of Bank or their beneficiaries.

(d) Except as listed on Schedule 5.17(d) , no Benefit Arrangement provides for any health, life or other welfare-type benefit for current or future retired or terminated employees or their beneficiaries of Bank or current or future terminated non-employee service providers to Bank or their beneficiaries, other than COBRA.

(e) The Benefit Arrangements have been operated in compliance in all material respects with their terms and the applicable provisions of ERISA, the Code, all regulations, rulings and announcements promulgated or issued thereunder and all other applicable governmental Laws and regulations with respect to Bank’s employees. No claim has been threatened, asserted, instituted, or, to Bank’s and Capitol’s knowledge, is anticipated against any Benefit Arrangement (other than routine claims for benefits and appeals of such claims), any trustee or fiduciaries thereof, Capitol, Bank, any of their respective ERISA Affiliates, any employee, officer, director, or other service provider of Capitol or Bank (whether current or former), or any of the assets of any trust of any of the Benefit Arrangements. Each Benefit Arrangement may be amended, terminated, modified or otherwise revised, other than with respect to the nondiscrimination rules and benefits protected under Sections 401(a)(4) and 411(d), respectively, of the Code, on and after the Closing Date, without further material liability to Parent, Merger Sub, any Affiliate of Parent, or Bank.

(f) All contributions, premiums, benefit payments and inter-company changes under or in connection with the Benefit Arrangements that are required to have been made in accordance with the terms of the Benefit

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Arrangements or applicable Law for any period through the Closing Date have been timely made or properly accrued.

(g) None of Capitol, Bank or any ERISA Affiliate is obligated under any Benefit Arrangement or otherwise to pay or provide any separation, severance, termination or similar benefit, unemployment compensation, or withdrawal liability, or accelerate the time of payment, funding, or vesting or increase the amount of compensation or benefits due to any employee, director, independent contractor or other service provider of any of Capitol or Bank (whether current or former) or their beneficiaries as a result of any transaction contemplated by this Agreement or as a result of a change in control or ownership within the meaning of Section 280G of the Code (alone or in connection with any subsequent termination).

(h) Except as set forth in Schedule 5.17(h) ,:

(i)  Schedule 5.17(i) contains a complete and accurate list of the names of each employee of Bank ( “Bank Employee ”) as of the date hereof. Bank has delivered to Parent the following information with respect to each Bank Employee: (i) date of hire, (ii) job title or position held, (iii) base salary or current wages or remuneration, (iv) employment status (i.e., active or on leave or disability and full-time or part-time) and (v) vacation and sick pay entitlement.

(j) There has been no mass layoff or plant closing as defined in the WARN Act or any similar state or local “plant closing” Law with respect to the employees of Bank.

5.18  Certain Contracts.

(a) Except as set forth in the Contracts attached to Schedule 5.18(a) , Bank is not a party to, and neither receives nor is obligated to pay benefits under:

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(b) Except as set forth on Schedule 5.18(b) , (i) each Contract listed on Schedule 5.18(a) is valid and binding on Bank and, to the knowledge of Bank and Capitol, on the other parties thereto; and (ii) neither Bank nor, to the knowledge of Bank and Capitol, any other party, is in material default under any such contract, and no event has occurred which constitutes, or with the lapse of time, the giving of notice or both could constitute, a default by Bank or, to the knowledge of Bank and Capitol, a default by any other party under such contract.

5.19  Absence of Changes.   Except as set forth on Schedule 5.19 , to the knowledge of Bank and Capitol, since December 31, 2008, there has not been:

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5.20  Brokers And Finders.   Except as set forth on Schedule 5.20 , none of Capitol, Bank or any of the directors, officers or employees of either has employed any broker or finder or incurred any liability for any broker or finder fees or commissions in connection with the transactions contemplated hereby.

5.21  Insurance.   Schedule 5.21 lists Bank’s insurance policies and binders of insurance and the amounts and types of insurance coverage available thereunder. All such policies of insurance (i) are in full force and effect and all premiums that are due and payable with respect thereto are currently paid; (ii) are adequate for the business conducted by Bank in respect of amounts, types and risks insured (other than the risk of terrorist attacks); and (iii) will remain in full force and effect until the Effective Time, subject to normal renewal policies and procedures, including, without limitation, the payment of premiums. There is no claim by Bank or any of its Affiliates pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed or that Bank has a reason to believe will be denied or disputed by the underwriters of such policies or bonds. There is no pending claim that would reasonably be expected to exceed the policy limits. All premiums due and payable under all such policies and bonds have been paid (or if installment payments are due, will be paid if incurred prior to the Closing) and Bank and its Affiliates are otherwise in material compliance with the terms of such policies and bonds. Except as provided in Section 8.3, neither Bank nor Capitol has knowledge of a threatened termination of, or premium increase with respect to, any of such policies. None of Bank or any of its Affiliates has ever maintained, established, sponsored, participated in or contributed to any self-insurance plan or program.

5.22  Accuracy And Availability Of Deposit Account Records.

(a) The deposit agreements and other documents relating to the deposit accounts of Bank to be delivered to Parent, or to which Parent and Merger Sub shall have unrestricted access after the Closing, will be all such documents in Bank’s possession or reasonably available to Bank at the Closing. Except as set forth on Schedule 5.22(a) , none of the Deposits of Bank is a Brokered Deposit.

(b)  Schedule 5.22(b) contains a true, correct and complete listing of all the Core Deposits of Bank as of June 30, 2009.

5.23  Properties.   (a) Bank has a valid leasehold interest in the real property (or portion thereof) described in Schedule 5.23(a)(1) , together with the improvements thereon and real property rights and appurtenances pertaining thereto (individually and collectively, as the context may require, the “Leased Real Property” ), free and clear of all Liens, other than any Permitted Liens. No such Permitted Lien materially impairs the use of the Leased Real Property for the purposes for which it is now operated. As of the Closing, Bank shall have good, marketable and insurable fee simple title to the real property described in Scheduled 5.23(a)(2) (the “Owned Real Property” ), free and clear of all Liens, other than any Permitted Liens. Except as set forth in Schedules 5.23(a)(1) and 5.23(a)(2) , Bank does not own or lease any real property.

(b) Attached to Schedule 5.23(b) is a true, correct and complete copy of the lease pursuant to which the Leased Real Property is leased to Bank (the “Real Property Lease ”), including all amendments, modifications, supplements, renewals, extensions, guarantees and other documents and agreements with respect thereto). The Real Property Lease is valid, binding and in full force and effect and is enforceable in accordance with its terms, subject to the Bankruptcy and Equity Exceptions, and, except as set forth in Schedule 5.23(b) , has not

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been modified, amended, nor any provision thereof waived and constitutes the entire agreement between the lessor and lessee with respect to the Leased Real Property so demised. Bank has delivered all notices delivered or received by Bank relating to the Real Property Lease. With the exception of the suit commenced by Bank seeking recovery of its tenant improvement allowance captioned 1st Commerce Bank, Plaintiff vs. James J. Stevinson, a foreign corporation; and GBRK, LLC, a California limited liability company, Defendant; James J. Stevinson, a California corporation, and GBRK, LLC, a California limited liability company, Third Party Plaintiffs vs. Rick A. Abelson, an individual; and Camino Al Norte Holdings, LLC, a Nevada limited liability company; Camino Al Norte Ventures, LLC, a domestic limited liability company; Does I through XX; and Row Corporations I through XX, Third Party Defendants, Case No. A576649; neither Bank nor, to the knowledge of Bank and Capitol, any other party thereto, is or is alleged to be in material violation of or in material default in respect of, nor has there occurred any event or condition which (with or without notice or lapse of time or both) would constitute a material violation of or material default under, the Real Property Lease. None of the parties to the Real Property Lease has given notice of termination of, or is seeking to amend, the Real Property Lease.

(c) Except as attached to Schedule 5.23(c) , Bank has not entered into any Contract, option or right of first refusal for the sale, transfer, lease, sublease, assignment or other disposition of the Leased Real Property (or any portion thereof) or the Owned Real Property (or any portions thereof).

(d) To the knowledge of Bank and Capitol, there are no outstanding material requirements from the lessor under the Real Property Lease requiring any repairs or work to be done with respect to the improvements constituting a part of the Leased Real Property or pertaining to the maintenance of such property in order to comply with the Real Property Lease. Neither Capitol nor Bank has received any notice of any actual or threatened liability or obligation arising under the Law of any Governmental Entity applicable to the Leased Real Property or the Owned Real Property.

(e) Bank has, or will have at the Effective Time, title, free and clear of all Liens, to all of the personal properties reflected on the statement of financial condition of Bank as of December 31, 2008 included in the Bank Financial Statements or acquired after such date, except for (i) Permitted Liens, (ii) those items that secure public or statutory obligations or any discount with, borrowing from, or obligations to any Federal Reserve Bank or FHLB, (iii) as reflected on the notes to the statement of financial condition of Bank as of December 31, 2008 included in the Bank Financial Statements, and (iv) as disclosed on Schedule 5.23(e).

(f) No Owned Real Property is comprised of a tax lot that also encompasses property that is not such Owned Real Property. There is no pending, or, to the knowledge of Bank and Capitol, threatened or contemplated condemnation, eminent domain or similar proceeding affecting any Owned Real Property or any portion thereof. To the knowledge of Bank and Capitol, there exists no fact or condition that would result in the termination of the existing access to the Owned Real Property.

5.24  Books And Records.    The minute books of Bank have been kept in the ordinary course of business and are complete in all material respects to corporate action taken by the Stockholders and the Bank’s Board of Directors, and are in compliance in all material respects with all applicable laws and regulations.

5.25  Condition of Assets.   Except as set forth on Schedule 5.25 , there is no material asset used by Bank in the conduct of its business which is not either owned by Bank or leased to Bank under appropriate licenses or leases. Bank has good and valid title to, or, in the case of the Real Property and leased properties and assets, valid leasehold interests in, all of its material tangible properties and assets, real, personal and mixed, used or held for use in its business, free and clear of any Liens, except Permitted Liens and as reflected in the Bank Financial Statements or as set forth on Schedule 5.25. All such assets owned or used by Bank are, and on the Closing Date will be, (i) adequate for the conduct of the Bank Business as currently conducted in all material respects and (ii) reasonably fit and suitable for the uses and purposes for which they were intended and in good operating condition subject to normal wear and tear and maintenance requirements, except where such failure to be in good operating condition would not materially impair the operation of Bank as presently conducted.

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5.26  Location And Conduct Of Business.    Bank conducts all the customer operations of the Bank Business at the Bank Offices set forth on Schedule 5.26 and at no other locations.

5.27  Intellectual Property.

(a)  Schedule 5.27(a)(i) to this Agreement contains a true, correct and complete listing of all Bank IP which, except as set forth on Schedule (a)(ii) , constitutes all Intellectual Property necessary to conduct the Bank Business as currently conducted and currently proposed to be conducted. Bank owns, or has the right to use pursuant to a valid and enforceable license, sublicense, Services Agreement with CBL or similar agreement, all Intellectual Property that is used in or necessary for use in the Bank Business as currently conducted and currently proposed to be conducted, in each case, free and clear of Encumbrances. Registrations for Bank Owned IP are valid, subsisting, enforceable and in full force and effect, and there has been no claim by any third party contesting the validity, enforceability, use or ownership of any of the Bank Owned IP.

(b) Neither the Bank Business nor any Bank IP infringes, misappropriates, violates or conflicts with a third party’s Intellectual Property, and neither Capitol nor Bank has received notice claiming otherwise and there are no facts or circumstances that would reas